TY  - JOUR
AU  - Kimball,Miles S.
TI  - Precautionary Saving in the Small and in the Large
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2848
PY  - 1989
Y2  - February 1989
DO  - 10.3386/w2848
UR  - http://www.nber.org/papers/w2848
L1  - http://www.nber.org/papers/w2848.pdf
N1  - Author contact info:
Miles S. Kimball
Department of Economics
University of Michigan
Ann Arbor, MI  48109-1220
Tel: 734/764-2375
Fax: 734/764-2769
E-Mail: mkimball@umich.edu
AB  - The theory of precautionary saving is shown in this paper to be isomorphic to the Arrow-Pratt theory of risk aversion, making possible the application of a large body of knowledge about risk aversion to precautionary saving, and more generally, to the theory of optimal choice under risk. In particular, a measure of the strength of precautionary saving motive analogous to the Arrow-Pratt measure of risk aversion is used to establish a number of new propositions about precautionary saving, and to give a new interpretation of the Oreze-Modigliani substitution effect.
ER  -